President Donald Trump’s decision to label Mexican cartels as foreign terrorist organizations (FTOs) has sparked significant concerns among analysts, who warn the move could expose American businesses to legal risks.

This unprecedented step, announced on Trump’s first day in office on January 20, targets eight cartels, including Mexico's dominant Sinaloa and Jalisco New Generation Cartels, which have been widely blamed for the U.S. opioid crisis that claimed ten of thousands of lives every year due to fentanyl overdoses.

It was recorded by the U.S Drug Enforcement Administration that in 2023, nearly 75,000 Americans died from overdose of an opioid like fentanyl-much of it sourced from its southern borders.

Experts said that the designation would allow counterterrorism measures to be employed in the fight against drugs, including covert opes, as well as allow US officials to go after cartel money.

"A foreign terrorist organisation designation, at its base level, opens up a number of different legal mechanisms to target material support or financing of these groups, which could conceivably be used to go after some of their financial networks, "

However, this would also mean that those who do business with the cartels, or have connections with individuals involved in such crime syndicates, could become targets too. For example, family members who send money from the US back to relatives in Mexico could be implicated if the money ends up in cartel activity.

Moreover, the cartels’ deep integration into Mexico’s economy—spanning industries like agriculture and mining—poses additional challenges for U.S. companies operating in the region. Analysts urge businesses to reassess their supply chains and partnerships to ensure compliance with anti-terrorism laws.

"Reexamine some of your suppliers, your partners. Talk with some law firms, make sure you are in compliance with this , because funding a foreign terorrist organisation is not something that a business wants on their record."

Trump's determination to eradicate cartels in Mexico

The designation also fuels tensions between the U.S. and Mexico, with Trump imposing a 25% tariff on Mexican goods but delayed some of these duties after blowback on financial market. The pause will last until April 2, although reports said the situation remians fluid and the specifics of the upcoming tariffs could change.

Mexico has responded by extraditing high-profile cartel figures and increasing enforcement efforts, showing Mexico's effort to appease Trump.

They include notorious drug lord Rafael Caro Quintero, who has been wanted by the US for the murder of a Drug Enforcement Administration agent in 1985. He was also one of the founding members of the now-defunct Guadalojara Cartel, which trafficked cocaine and marijuana to the US in the 1980s.

Experts speculate that Trump could continue to push out more extreme and controversial measures. Trump has hinted at the possibility of sending troops into Mexico to take out the cartels, fuelling fears of a military conflict on America's southern borders.